standard of this ratio. It depends on the objective, efficiency and capacity of thecompany.

However, the company should try to maintain this ratio at a level over andabove the standard Bank Interest Rate to cover the risk involved in the business. TheCompany should try to increase this ratio gradually.IV) OPERATING RATIO = cost

of goods sold + operating expenses /net sales 100= 25638.50+64.35+652.31+28 2.37 / 33093.93 100= 26637.53 / 33093.93 100= 80.50%Operating ratio = 80.5%This ratio shows the relationship between the operating cost and net sales of thecompany. The ratio indicates the managerial efficiency to minimize the operating cost.The lower the ratio, the greater is the

management efficiency. The company is having80.5% operating ratio. The company should try to minimize the ratio ,so that the portion of profit can be increased.C. LEVERAGE / SOLEVENCY RATIO I) DEBT EQUITY RATIO = Long term debt / shareholders equity= 2461.99 + 3818.53/ 385.41 + 6484.34= 6380.52 /

7839.50= 81.4:100This ratio reveals the relation between the long term debt and Proprietors fund of theconcern, it also shows the efficiency of the management in financial planning. Thedebt equity ratio is 81.40:100, which means that for every Rs 100 of the Proprietorsfund, the long term debt stands to Rs 81.40.The standard ratio in this case is 0.33 .thismeans

that for every Re. 1 of the proprietors fund, the long term debt should be 0.33 paise. It is assumed that the position of the creditor is uncomfortable if the ratio ishigher than this.II) PROPRIETARY RATIO = Shareholders Equity / Total Assets.=Share capital + general reserve / fixed + current assets= 2461.99 + 3818.53 / 5387.31 +

10383.78=6280.52 / 15771.09 = 0.4 Proprietary ratio = 0.4:1This ratio explains the relation between the total assets and the proprietary fund of thecompany. This shows that how much proprietary fund is engaged in the businesswhile financing the total assets of the company. Here the company has engaged

40%of the proprietary fund for financing its assets. This ratio also shows that how muchthe company is dependent on external equity while financing its total assets. Here thecompany is dependent on external equity to the extent of 60%.The company shouldgradually try to decrease the ratio of dependent on the external equity. This will inturn

increase the share of profit of the company.D. ACTIVITY RATIO / TURNOVER RATIO I) INVENTORY TURNOVER RATIO = Cost of goods sold / average inventory=25638.50 / ( 2421.83 + 2500.95 / 2) = 25638.50 / 2461.39= 10.42 timesThis ratio indicates the relation between the inventory and sales of the company.Which provide us

the information about the velocity of stock during the year. Highratio is always desirable by the company; the high ratio indicates a good position of the company. The companys inventory turnover ratio is 10.42 times, which means themovement of stock is approximately 10.5 times in a year.II) FIXED ASSETS TURNOVER RATIO = Sales / Fixed

Assets.= 33093.93 / 5387.31= 6.14 timesFixed assets turnover ratio = 6.14 times.This ratio establish a relation with the fixed assets and sales of the company. Whichindicates, how many times the fixed assets is utilised to achieve the sales of thecompany. Here the company is utilising 6.14 times of its fixed assets to achieve thesales of the company. The

company should try to increase this ratio, which willincrease the production and ultimately the sales of the company. III) CURRENT ASSETS TURNOVER RATIO = Sales / current assets= 33093.93 / 10383.78= 3.2 timesCurrent assets turnover ratio = 3.2 times.This ratio establish a relation between the current assets and sales

of the company.This ratio indicates that how many times the current assets in being utilised toachieve the sales by the company. The current turnover ratio of the company is 3.2times, which means that the company is utilising 3.2 times its current assets for achieving its sales.